4 Ways I Teach My Three-Year-Old Son About Money

In a blog I wrote—10 Life Lessons for My Three-Year-Old Son—one was to learn how to control money or it will control you.Some things easily get stashed into the “I will get to that later when he is a little older” category. Then we wake up one day and they are about to leave our home for good. Handling money is one of those. Besides, what can you teach a three or four year old about money? Well quite a bit actually.

Like everything else our children will learn more by what we model than what we talk about. So be warned—if you are not good at managing your money, it will be hard for your child to learn how. But, hey, why not begin now? Doing so will provide a great role model for your child.

Here are 5 ways that I am teaching my young son now about handling money wisely:

Give, Save, Spend

Teach your child to give away 1/3 of the money they get or earn, save 1/3, and spend 1/3. We began with these numbers because they don’t need a lot of money for spending, and it’s an easier concept for a young child to put equal amounts into three categories.

Danielle and our son took three mason jars, decorated them, labeling one for giving, one for saving, and one for spending. We keep these in our breakfast area on a shelf in plain view for him to see.

The other day my son was talking to me while I was sitting at my desk. He noticed a change jar on my desk, and he told me it was “good to give money away, so I should give him some!” My first reaction was, “well you clever little guy…” Then I decided to give him three coins. What do you think we did next? You got it! We walked right into the kitchen and took down the jars. One coin to give away, one to save, and one to spend.

Pay for things

Many young dads tell me that their children don’t understand how money works because they think all you need is a plastic card. Yep, that is the world we live in today. I began thinking about how I can help overcome that with my son. Simple answer—pay cash sometimes. Hard, green bills.

We stopped at 7-11 the other day to get a Slurpee. He picked out his flavor, helped me fill his cup, and then we walked up to the counter to pay for them. I pulled out a $10 bill and handed it to my son. “Tell the kind gentlemen that we want to pay for these two Slurpees.” He and the guy working the cash register continued the transaction. On the way out of the store, my son asked me why he gave us money back. Great teaching opportunity.

Talk about money as we go

Which leads me to this way I teach my son. We talk about money. I talk about how we pay for things. How we own things. How we steward or take care of our possessions.

Make it fun

I haven’t started this one, but will soon as I get this game from Dave Ramsey—Financial Peace Junior. The Financial Peace Junior Kit was created to teach kids ages 3-12 the value of money and hard work. The updated kit includes all new tools, activities and games to make learning about money fun for kids. It features an easy-to-follow parent guide and a 35-page kids’ activity book with four lessons.

Why does it matter?

Two reasons for me:

I plan on passing on some wealth to my son, so I want him to understand how money works. I want him to be a good steward of money and use it for good. I know enough that if he doesn’t understand how to handle money, he can hurt himself and others by misusing it.

I have a little more urgency since I am 50 years older than my son. I don’t want to wait until he is in his 20s or 30s because odds are that I will not be around to teach and guide him then.

Take a look at these statistics from I read on Dave Ramsey’s site:

54% of parents rated their teenager’s knowledge of money management as either “good” or “excellent,” but 78% percent of the children of those respondents rated their own knowledge of money management as merely average or even poor. (Capital One and Consumer Action, 2003)

Only 26% of 13-21 year olds surveyed said that their parents taught them how to manage money. (JumpStart Coalition for Financial Literacy)

The fastest growing group declaring bankruptcy is young adults, ages 20 to 24. (Alejandro Cabezut, 2004)

How are you teaching your children about how to handle money?

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I am a longtime Austinite. Married my beautiful wife over 25 years ago. Adopted our son September 2012. Currently a writer and loving it. Previous jobs and careers include project management, missionary, and pastor. I enjoy sports (both watching and playing), traveling, reading, digging in dirt and hanging with my friends and family.

6 thoughts on “4 Ways I Teach My Three-Year-Old Son About Money”

When Melissa started her first babysitting job last summer I helped her build a spreadsheet on the computer and explained the 10-10-80 approach from the book Success! The Glenn Bland Method. Being 14 at the time she was able to understand this and still does it with what she may earn from babysitting, working at my office, or whatever. She charts her total earned, 10% to Church/Charity, 10% to Savings (of which I have control over her savings account) and 80% for her. I’ve explained to her how I didn’t learn and do that as I was younger and I told her if I had been doing that since I was her age I’d probably be retired and sitting in the woods somewhere, or on a boat on a lake. She seems to understand. Now, I’m trying to get to the 10% savings part. I’m not there yet, but I’m working on it. One thing she doesn’t get is an allowance. I’ll pay her to do work around the house that are outside her normal duties, but I don’t give her an allowance. I’ve taught her that there are items all of us in the house must do for it to run properly and those tasks/chores are normal in a family. If there are things outside of her normal tasks, though, I’ll offer to pay her should she do them. The grout in the kitchen needed cleaning. She was offered that task as a paying job. Hmm, money motivates. However, she gets nothing just for living in the house. That is too much of a ‘take care of me’ mentality that I disagree with. I’ve taught her that if you don’t work, you don’t eat and she needs to take care of her fair share in the house. Teach them in the way they should go and when they get older, they will not depart from it. That applies to all aspects of life, and hopefully, we adults are not to old to learn and we’ll apply it to our own. Great topic and great teaching. Blessings my friend

I work at Wal-Mart on the weekends and when I come home from work, I do come home with a few grocery items and sometimes some fun things for the kids like coloring books, bubbles, etc…. I have unconsciously conditioned the kids that when I come home, they get something. You can imagine the drama that ensues when I come home empty handed. 🙂 Rick and I have now started allowance with the kids. Victoria likes to hide her money and Nikolas actually tried to give a boy at the park 50 cents. 🙂

As hard as it has been being a one income family on a teacher’s salary the last 18 months, it has actually been a blessing because we have financial discussions with the boys nearly everyday. They are 12 and 15 and have had to decide what is a need and what is a want. They both have been very understanding and have had to work to earn money this summer to pay for youth activities themselves. Our oldest got a job for the Spring and Summer keeping scorebooks at the ballpark. He absolutely loved it and has enjoyed the process of saving and giving and being able to pay for activities/things himself.

We taught our boys similarly when they were young and now we are beginning to see the fruits of that teaching as we are living on a slim income. I believe they can truly appreciate the value of hard work, saving and giving.